Global market: SGX Nifty to US Fed meeting — key triggers for stock market today

Global market today: Due to sell off in oil and gas, basic materials and financial shares, all three key benchmark indices of the US stock market ended lower on Wednesday. Investors were cautious as global markets were awaiting outcome of the US Fed meeting and the US Central Bank announced 25 bps rate hike on the expected lines. This triggered sell off in the US dollar as Dollar Index slipped to one month low. This weakness in the US dollar fueled gold rates today at 14-month low whereas crude oil prices slipped to two month low. Signaling the consolidation at overbought condition to further continue, SGX Nifty today opened lower and it has been trading in near 100 points zone after Asian stock market's opening bell today.

Here we list out important global market triggers that may dictate Indian stock market today:

US stock market

Due to sell off triggers in oil and gas, basic materials and financial shares, US stock market ended lower on Wednesday. All three key benchmark indices on Wall Street ended lower as Dow Jones index lost 0.80 per cent, S&P 500 index lost 0.70 per cent whereas tech heavy weight Nasdaq corrected to the tune of 0.46 per cent.

Asian stock market today

In early morning deals, Japanese Nikkei added 0.12 per cent, Shanghai index went off 0.05 per cent, Hong Kong's Hang Seng index surged 0.52 per cent whereas south Korean KOSPI corrected to the tune of 0.51 per cent.

US Fed rate hike

After FOMC meeting, US Fed declared 25 bps interest rate hike, which was on the expected lines of global market observers. However, the US Central Bank maintained that US banking system is sound and resilient. But, inflation at higher levels is still a big worry for the US Federal Reserve.

Announcing the interest rate hike, the US Fed said in a press statement, "The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 5 to 5-1/4 percent."

The Board of Governors of the Federal Reserve System voted unanimously to raise the interest rate paid on reserve balances to 5.15 percent, effective May 4, 2023.

SGX Nifty today

Signaling muted opening on Dalal Street today, SGX Nifty today opened downside at 18,155 and went on to hit intraday low at 18,078 levels.

"SGX Nifty is signaling sideways to weak opening on Dalal Street. However, my advice would be buy on dips as overall trend is still positive and FIIs are continuously buying in Indian equities," said Anuj Gupta, Vice President — Research at IIFL Securities.

US dollar at one month low

After announcement of US Fed rate hike on expected lines, sell off triggered in the US dollar and Dollar Index slipped to one month low. In early morning session, Dollar Index lost 0.24 per cent to 100.870 levels.

On how it will impact US dollar to INR (Indian National Rupee), Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas said, "We expect Rupee to trade with a slight negative bias on risk aversion in global markets amid renewed fears over banking crisis in US and worries over global economic recovery. However, weak Dollar and extended fall in crude oil prices may prevent sharp fall in Rupee. Sustained FII inflows may also support Rupee at lower levels. Investors may remain cautious ahead of FOMC meeting and ISM services PMI. Fed is expected to hike interest rates by 25 basis points. Traders may also remain cautious ahead of non-farm payrolls data later this week. We expect USDINR spot to trade in between 81.30 to 82.30 in the near term."

Crude oil price

After 25 bps US Fed rate hike, crude oil prices went further downward as Brent crude oil price hit 2-month low. In early morning deals, WTI crude oil price has bounced back strongly adding over one per cent. However, WTI crude oil price is still below $70 per barrel. Brent crude oil price surged 1.30 per cent in early morning Asian stock market trade.

Gold rate today

After US Fed rate hike on expected lines, gold prices witnessed strong buying interest and the yellow metal price went on to hit a new high of $2,081.80 per ounce in international market whereas it climbed to 14-month high in domestic market.

US bond yield

In early morning session, US 10 year bond yield slipped over 2 per cent to 3.334 levels whereas US 30 year bond yield corrected 0.89 per cent to 3.682 levels.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.